At Your Doorstep

Andrew Work (SCMP, 30 March 2007)

Property rights matter.  Immensely.  Starting with dominion over your own body, all freedoms in society flow from your ability to retain and control the use of your property.  That is why it is so alarming that in Hong Kong, property rights seem to be under assault from the corporation to the lowly hawker stall and right up to your doorstep.
The Property Rights Alliance recently launched their first International Property Rights Index.  Hong Kong did middling well, ranking 17, just behind the US and Canada.  However, there is little doubt that it will drop in the future given the changes sweeping our society.

The PRA Index outlines 3 areas:  Political and Legal Environment, Physical Property Rights (including financial property) and Intellectual Property Rights.  Many components are based on attitudinal surveys conducted by groups like Transparency International and the World Bank.  They reflect what people believe based on their experience of property rights.  How can any observer in Hong Kong today believe but that we are losing ground on two of three components?  While Hong Kong has mounted some of the most aggressive defenses of intellectual property rights in the online sector, we are losing ground on the two other components.

Many legislators are quick to oppose to government mandated evictions to make way for new development in SOHO, Mong Kok’s Garden Street, or Wanchai’s Wedding Card Street.  Long-standing hawker stalls and roadside restaurants are shunted aside by bureaucrats in the name of societal development.  Where people have clear right to their property, legislators are right to stand in defense of these individuals.  They understand that the use of eminent domain, government mandated seizure of property for assumed benefits to society, is wrong in this case.  However, their recent attacks on Link have undermined their ability to defend these constituencies by setting the precedent for violations of all property rights in Hong Kong.

It was a step forward when the Link REIT returned assets to the people of the market.  Hong Kong people, along with international investors, relieved taxpayers of the burden of an inefficiently run car park and shopping centre conglomerate.  The results have ended a system of a minority of shop-owners and privileged workers receiving unfair subsidization from Hong Kong’s middle class taxpayers.  A previously unrealized asset is now contributing to many retirement funds.  These shares are property as sure as the ownership of a flat and their protection is vital to people’s independence in old age.  The ability of the designated managers to operate these assets free of arbitrary whims of coercive government power is the basis of the shareholders’ expectations of returns.  However, many legislators would violate the property rights associated with these assets to indulge in political grandstanding.   

The Link is repeatedly called upon by legislators, goaded by unions (on wages) and industry special interests (complaining over tenancy agreements for restaurants and doctors), to explain its actions under threat of special legislation.  This populist legislative activism deters investment in Hong Kong by external investors and Hong Kong people alike. If Link today, then who tomorrow?  Ironically, the legislators who meddle in Link’s affairs are setting the precedent for violating the rights of other constituencies, weakening property rights for all.

Legislators attacking Link would no doubt argue they were working for the common good.  This is the exact argument used to violate all property rights.  At one extreme it justifies absolute communism, the elimination of property rights for the common weal.  At a more nuanced level, it justifies government’s exercise of eminent domain.  Eminent domain is often justified by providing a government or third party determined level of compensation.  But for some, no money can replace what is taken from them:  A shop in the family for generations.  A flat they grew up in and inherited from their parents.  A New Territories property belonging to native ancestors.

Lawmakers aggressively use legislative power to pursue their vision of Hong Kong by violating one group’s property while defending another’s right to freedom.  You cannot morally deny and promote the same rights in one breath.

This attack comes closer to our homes at every turn.  Bars, restaurants, (formerly) private clubs, and your apartment building (run normally by incorporated owners) were overnight transformed from private establishments, property, into public spaces under the new Smoking Ordinance. Whereas these were previously private areas, the new legislation deemed them public by virtue of the fact that people visited them and employees were present.  If the doorstep of your flat is now public domain, how long before the government walks into your living room?

Nobel laureate Friedrich Hayek said, “Private property is the most important guarantee of freedom.”  He was right.  Who will stand for  your right to your property when everyone else’s has been taken away?


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